Last year, Huawei's smartphone sales volume and sales increased, but operating profit fell sharply. The company has significantly increased its marketing expenses to enter new markets such as the US.
According to an Android Authority, Huawei's operating profit in 2016 will decline 10% year-on-year to $ 2.0 billion. Earlier this year, Huawei said its operating profit target for 2016 was $ 2.5 billion (about 2.87 trillion won).
In the same period, mobile phone sales amounted to 139 million units, up 30% from the previous year (107 million units). The premium smartphone P9 and P9 Plus exceeded 10 million units in global shipments. The P9 series is the first model in China to have sold more than 10 million units of premium phones. Sales also climbed 42 percent to $ 26 billion.
The reason for the decline in operating profit is attributable to the large amount of marketing expenses spent to increase sales volume.
According to market researcher Strategy Analytics, Huawei sold 55% of its global sales volume in China last year. In 2013, it dropped by 12 percentage points from 67%, but it still depends on domestic demand.
In particular, Huawei was the fifth-largest shareholder in the US, the world's largest consumer market. Huawei showed its commitment to advance to the US by launching Mate 9 at CES2017, the world's largest consumer electronics event last month.
"We want to be the world's second-largest smartphone maker within one to two years," said CEO of Bing Bong-hwa Huawei Consumer Business. Mate 9 is compatible with Google's virtual reality (VR) platform 'DayDream' and Amazon's AI secretary Alexa. He checked Apple several times, saying Mate 9 is thinner than the iPhone 7, has longer battery life, and is charging faster.
In other words, the decline in operating profit of Huawei last year is an investment cost to secure a larger market. Huawei has set its profit target for the Consumer Business Group at $ 4 billion this year.
In the fourth quarter of last year, Samsung Electronics accounted for 17.7% of Samsung Electronics, 17.8% of Apple, and 10.2% of Huawei. This is the first time that Chinese companies have surpassed the global smartphone market share of 10%. According to market researcher TrendFoss, Samsung Electronics is expected to account for 22.6% of total sales, 15.6% for Apple and 11.1% for Huawei in 2017.